Kenneth G. Coffin

A Fifth Circuit panel wanted to know why investors should get another shot at a direct class action alleging that McDermott International Inc. made misrepresentations about a $6 billion merger, asking Monday if the case before the court was "analogous" to a case alleging the company overpaid for the merger. The investors claim McDermott deprived them of their federal right to a fully informed vote on the merger between McDermott and Chicago Bridge & Iron NV that contributed to McDermott's bankruptcy, but U.S. Circuit Judge Irma Carrillo Ramirez asked if their suit was "analogous" to one alleging that McDermott overpaid in its acquisition of CB&I. Overpayment claims are derivative, meaning that the shareholders would lose the ability to bring direct class action claims against the company. "Don't we end up at the same place?" Judge Ramirez asked. "Either there would not have been a merger, or McDermott wouldn't have paid as much." The investors' attorney, John Rizio-Hamilton of Bernstein Litowitz Berger & Grossmann LLP, told the court that "we don't end up in the same place at all" as a case alleging that McDermott overpaid for the merger. The investors did not come to the court asking for damages equivalent to the entire amount of market cap McDermott lost as subsequent information about the transaction became public, Rizio-Hamilton said. "If we were seeking overpayment damages, I promise you, they would be much, much larger than the damages we're seeking on these four corrective disclosure days," he said. "The four days represent just a handful of days when McDermott's stock was in free fall." McDermott merged with CB&I in 2018. The investors allege that McDermott overstated the amount of due diligence it had done on CB&I's four largest construction projects, which CB&I had internally forecast would generate at least $1 billion in additional, undisclosed costs, according to briefing from the parties. Just a few months after the merger wrapped up, McDermott had to declare bankruptcy in no small part due to those same construction projects, the investors alleged. The lower court got it wrong by finding that the investors' damages theory "somehow transformed our direct claim into a derivative one," Rizio-Hamilton said. When plaintiffs such as the investors assert an individual right, that claim is direct when it is brought outside the fiduciary duty context, he said, citing both the 2015 decision in NAF Holdings LLC v. Li & Fung Trading Ltd. and the 2016 decision in Citigroup Inc. v. AHW Investment Partnership by the Delaware Supreme Court. U.S. Circuit Judge Dana Douglas pointed out that opposing counsel claimed the investors did not bring that argument before the lower court. The Delaware Supreme Court created a two-prong test for direct versus derivative claims, in a case called Tooley v. Donaldson Lufkin & Jenrette Inc. It is true that the investors did not say that Tooley does not apply under Citigroup and NAF, but both of those latter cases are subsequent precedents by the Delaware Supreme Court interpreting and limiting Tooley, Rizio-Hamilton said. The Fifth Circuit's precedent allows for a party to present subsequent authority on the issue of categorizing a claim as derivative or direct to the appellate court, he said. McDermott's attorney, Anthony Lucisano of Baker Botts LLP, told the court that the damage arising from a misleading proxy statement to a shareholder flows from the damage done to a corporation. Because the harm stems from damage to the corporation, the claims must be derivative, he said. U.S. Circuit Judges Edith Brown Clement, Dana M. Douglas and Irma Carrillo Ramirez sat on the panel for the Fifth Circuit. The investors are represented by John Rizio-Hamilton, Katherine M. Sinderson, Aasiya F. M. Glover and Jonathan G. D'Errico of Bernstein Litowitz Berger & Grossmann LLP and Chet B. Waldman and Matthew Insley-Pruitt of Wolf Popper LLP. McDermott is represented Angela C. Zambrano, Mason Parham and Phillip Shaverdian of Sidley Austin LLP and David D. Sterling, Amy Pharr Hefley, J. Mark Little, Anthony J. Lucisano and Frank Mace of Baker Botts LLP. The case is Local 813 Insurance Trust Fund et al. v. McDermott International et al., case number 25-20147, in the U.S. Court of Appeals for the Fifth Circuit.

Mar 2

3 min

Dallas – Sidley is pleased to announce that Kenneth Coffin has rejoined the firm as counsel in its White Collar Defense and Investigations practice in Sidley’s office in Dallas. Mr. Coffin returns to Sidley from the U.S. Attorney’s Office for the Northern District of Texas, one of the nation’s largest federal districts, where he served as Civil Chief. Earlier in his career, he began his legal journey at Sidley as both a summer associate and associate. Mr. Coffin is a seasoned litigator and trial lawyer, with extensive experience in government investigations, healthcare, and government enforcement. He has led hundreds of investigations, including a wide array of matters involving the False Claims Act (FCA), healthcare enforcement, government contracts, parallel civil and criminal investigations, and parallel state and federal investigations. Mr. Coffin also has extensive experience litigating challenges to federal statutes and regulations. Before rejoining Sidley, Mr. Coffin served for over 11 years in trial-level and leadership positions at the U.S. Attorney’s Office for the Northern District of Texas. He most recently served as the office’s Civil Chief, where he led a team of AUSAs and support professionals handling civil litigation and government investigations on behalf of the United States across the Northern District of Texas. As Civil Chief, Mr. Coffin supervised the Division’s Affirmative Civil Enforcement (FCA), Financial Litigation, and Defensive sections. He also served as part of the office’s senior management team, advising the U.S. Attorney and other Department of Justice officials on high-profile matters. Earlier in Mr. Coffin’s tenure, he directed the district’s Affirmative Civil Enforcement practice, where he oversaw actions involving the False Claims Act, healthcare fraud, procurement fraud, and COVID-19–related enforcement. Mr. Coffin led multiple consequential False Claims Act investigations during his tenure in government, resulting in hundreds of millions of dollars in settlements on behalf of the United States. Sidley is an elite global law firm. With approximately 2,300 lawyers and nearly 160 years of experience, we have established a reputation for deploying innovative legal strategies to achieve powerful results for our clients in complex transactional, restructuring, crisis management, investigation, regulatory, and litigation matters. Our perspective and reach are truly global, supported by 21 offices strategically situated in key commercial, regulatory, and financial centers across the world. Our lawyers and business professionals, fluent in more than 75 languages, possess the cultural awareness and cross-border legal acumen needed to bring clarity to a dynamic business landscape. Matt Messinger, Director, Public Relations, +1 312 456 4009 Attorney Advertising—Sidley Austin LLP is a global law firm. Our addresses and contact information can be found at www.sidley.com/en/locations/offices. Sidley and Sidley Austin refer to Sidley Austin LLP and affiliated partnerships as explained at www.sidley.com/disclaimer.~~Dallas – Sidley is pleased to announce that Kenneth Coffin has rejoined the firm as counsel in its White Collar Defense and Investigations practice in Sidley’s office in Dallas. Mr. Coffin returns to Sidley from the U.S. Attorney’s Office for the Northern District of Texas, one of the nation’s largest federal districts, where he served as Civil Chief. Earlier in his career, he began his legal journey at Sidley as both a summer associate and associate. Mr. Coffin is a seasoned litigator and trial lawyer, with extensive experience in government investigations, healthcare, and government enforcement. He has led hundreds of investigations, including a wide array of matters involving the False Claims Act (FCA), healthcare enforcement, government contracts, parallel civil and criminal investigations, and parallel state and federal investigations. Mr. Coffin also has extensive experience litigating challenges to federal statutes and regulations. Before rejoining Sidley, Mr. Coffin served for over 11 years in trial-level and leadership positions at the U.S. Attorney’s Office for the Northern District of Texas. He most recently served as the office’s Civil Chief, where he led a team of AUSAs and support professionals handling civil litigation and government investigations on behalf of the United States across the Northern District of Texas. As Civil Chief, Mr. Coffin supervised the Division’s Affirmative Civil Enforcement (FCA), Financial Litigation, and Defensive sections. He also served as part of the office’s senior management team, advising the U.S. Attorney and other Department of Justice officials on high-profile matters. Earlier in Mr. Coffin’s tenure, he directed the district’s Affirmative Civil Enforcement practice, where he oversaw actions involving the False Claims Act, healthcare fraud, procurement fraud, and COVID-19–related enforcement. Mr. Coffin led multiple consequential False Claims Act investigations during his tenure in government, resulting in hundreds of millions of dollars in settlements on behalf of the United States. Sidley is an elite global law firm. With approximately 2,300 lawyers and nearly 160 years of experience, we have established a reputation for deploying innovative legal strategies to achieve powerful results for our clients in complex transactional, restructuring, crisis management, investigation, regulatory, and litigation matters. Our perspective and reach are truly global, supported by 21 offices strategically situated in key commercial, regulatory, and financial centers across the world. Our lawyers and business professionals, fluent in more than 75 languages, possess the cultural awareness and cross-border legal acumen needed to bring clarity to a dynamic business landscape. Matt Messinger, Director, Public Relations, +1 312 456 4009 Attorney Advertising—Sidley Austin LLP is a global law firm. Our addresses and contact information can be found at www.sidley.com/en/locations/offices. Sidley and Sidley Austin refer to Sidley Austin LLP and affiliated partnerships as explained at www.sidley.com/disclaimer.

Oct 24

4 min

A former metro Atlanta police officer who says he was fired for opposing his department's diversity hiring initiatives urged a federal judge Monday to buck a recommendation that his suit be spiked, arguing his complaints about the "hot issue" constituted protected speech on a matter of public interest. Counsel for Barry Honea — a white former city of Lawrenceville officer — told U.S. District Judge Sarah E. Geraghty that while his complaints about a purported push to hire more women and people of color were related to his personal advancement, he was engaging with a robust political discourse around the issue. Honea's attorney Larry Allen Pankey added that the Lawrenceville police department reinforced the notion that the topic was one of public importance by aggressively promoting its efforts to diversify the force. "This was a hot issue," Pankey said, pushing back on a federal magistrate judge's recommendation that the suit be dismissed. "... They're trumpeting the diversity they're going after, but it's hurting the white males." Monday's oral arguments on the city's motion to dismiss came about four months after a federal magistrate judge said that Honea, a nearly 15-year veteran of the department, had failed to allege an actionable claim for discrimination or retaliation. Honea sued the city of Lawrenceville, along with former Police Chief Tim Wallis, Mayor David Still, and city manager Chuck Warbington in 2023 over his termination two years prior. He alleged that city and department officials developed an unconstitutional plan to promote and hire less deserving non-white and female candidates, while sidelining "mid-level, stagnant" officers like Honea. Among the moves Honea protested was the promotion of the "completely unqualified" Tawnya Gilovanni to the department's command staff, complaining to other superiors that the role had effectively been created for her. He said that after Gilovanni became Honea's direct supervisor, she accused him of gunning for her job, and later engineered bogus charges that he was stealing company time, which ended with his ouster. Gilovanni, for her part, later accused high-level department officials of sexual harassment, leading to Wallis' firing for allegedly failing to put to a stop to it, according to a lawsuit he filed against the city. In July, U.S. Magistrate Judge Catherine Salinas said in a report and recommendation that Honea's First Amendment retaliation claim should fail, because his allegedly protected speech had little to do with public discourse. "Everything about Honea's speech — the content, the form, and the context — all point to the conclusion that Honea 'spoke out' as an employee with a private grievance, rather than as a concerned citizen," Judge Salinas wrote. As to Honea's gender and race discrimination claims, the judge found that Honea had little more than an allegation that, because of the department's diversity push, it necessarily wanted to force him out. "Honea has the burden to plead facts that, when pieced together, create a convincing mosaic of circumstantial evidence showing discrimination. Here, the mosaic that Honea paints is insufficient to that task," she added. Andrew Kim, representing the city, likewise urged Judge Geraghty on Monday to "disregard all legal conclusions masquerading as facts," and said Honea's gripes about the hiring practices were little more than garden variety workplace issues. "The First Amendment does not protect employees complaining about their supervisors," Kim said. But despite Judge Geraghty's stated sentiment that she agreed with Judge Salinas that Honea didn't appear to have been treated any differently than his fellow officers, his attorney Pankey said the court should take another look at the allegations that other employees were having sex on the job or otherwise flouting the rules. "Other people are doing funny things in this police department," he said, adding of the charges against his client, "This is entirely concocted. It's not true." Judge Geraghty declined to issue an immediate ruling on the motion to dismiss. Honea is represented by Larry Allen Pankey of Pankey & Horlock LLC. The city and its officials are represented by Andrew Kim and Kenneth G. Menendez of Freeman Mathis & Gary LLP. The case is Honea v. City of Lawrenceville et al., case number 1:23-cv-01070, in the U.S. District Court for the Northern District of Georgia.

Nov 10

3 min

Retail landlord Simon Properties and luxury retailer Saks Global on Monday wrangled over the wording of a 2024 investment agreement as they asked a Texas bankruptcy judge to determine the fate of the leases of two Saks locations. Counsel for the parties made their closing arguments to U.S. Bankruptcy Judge Alfredo R. Perez after three days of hearings on Simon's request for a ruling that it can terminate the leases without the notice periods in the leases themselves. The parties are disputing whether a letter agreement Simon and Saks entered into when Simon invested $100 million in Saks in 2024 allows Simon to terminate the leases of a Saks location in Woodbury, New York, and a Neiman Marcus store in Palo Alto, California, effective Jan. 8, six days before Saks declared bankruptcy and a stay on contract terminations went into effect. Both parties acknowledged that the agreement granted Simon the right to terminate the Palo Alto lease and one other lease for "failure to perform" on either lease and that Saks had overdue lease payments, but they disagreed on whether the letter overrode notice of default and cure period provisions in the leases that would have given Saks 30 days from its Jan. 8 notice to make up the payments. At Monday's hearing, Simon counsel Robert Velevis argued the default provisions in the leases were not relevant, saying the agreement specifically allowed termination for "failure to perform" and not "default." "The letter agreement does not give a cure period," it said. Saks counsel Allyson Smith argued the letter agreement doesn't define "failure to perform" but the leases do, and that definition includes cure rights. The sole purpose of the clause in the letter agreement was to give Simon the right to terminate the leases for a default on a different lease, she argued. She also argued calling a default on the leases was a break with the parties' standard relationship. She said Simon had always accepted late payments, for example when Saks disputed a particular charge and delayed payment until the dispute was reconciled. "There has always been an amount technically outstanding," she said. Velevis argued this only meant that Simon had the right to terminate the leases anytime after the agreement was signed, and only invoked it now for "its own reasons." Smith claimed Simon learned of Saks' plans to file and "manufactured a default" in order to seize the leases and prevent Saks from selling them in its Chapter 11. Judge Perez reserved decisions on the issue. Simon Property Group is represented by Duston K. McFaul, Robert S. Velevis, Jeri Leigh Miller and Maegan Quejada of Sidley Austin LLP. Saks is represented by Kelli S. Norfleet, Kenric D. Kattner, Arsalan Muhammad, Kourtney P. Lyda and David Trausch of Haynes Boone and Debra M. Sinclair, Robin Spigel, Allyson B. Smith, Betsy L. Feldman, Jessica D. Graber, Jennifer J. Hardy, Ryan B. Bennett, Stuart R. Lombardi and Nathaniel G. Ward of Willkie Farr & Gallagher LLP. The case is In re: Saks Global Enterprises LLC et al., case number 4:26-bk-90103, in the U.S. Bankruptcy Court for the Southern District of Texas.

Mar 2

2 min

A Fifth Circuit panel wanted to know why investors should get another shot at a direct class action alleging that McDermott International Inc. made misrepresentations about a $6 billion merger, asking Monday if the case before the court was "analogous" to a case alleging the company overpaid for the merger. The investors claim McDermott deprived them of their federal right to a fully informed vote on the merger between McDermott and Chicago Bridge & Iron NV that contributed to McDermott's bankruptcy, but U.S. Circuit Judge Irma Carrillo Ramirez asked if their suit was "analogous" to one alleging that McDermott overpaid in its acquisition of CB&I. Overpayment claims are derivative, meaning that the shareholders would lose the ability to bring direct class action claims against the company. "Don't we end up at the same place?" Judge Ramirez asked. "Either there would not have been a merger, or McDermott wouldn't have paid as much." The investors' attorney, John Rizio-Hamilton of Bernstein Litowitz Berger & Grossmann LLP, told the court that "we don't end up in the same place at all" as a case alleging that McDermott overpaid for the merger. The investors did not come to the court asking for damages equivalent to the entire amount of market cap McDermott lost as subsequent information about the transaction became public, Rizio-Hamilton said. "If we were seeking overpayment damages, I promise you, they would be much, much larger than the damages we're seeking on these four corrective disclosure days," he said. "The four days represent just a handful of days when McDermott's stock was in free fall." McDermott merged with CB&I in 2018. The investors allege that McDermott overstated the amount of due diligence it had done on CB&I's four largest construction projects, which CB&I had internally forecast would generate at least $1 billion in additional, undisclosed costs, according to briefing from the parties. Just a few months after the merger wrapped up, McDermott had to declare bankruptcy in no small part due to those same construction projects, the investors alleged. The lower court got it wrong by finding that the investors' damages theory "somehow transformed our direct claim into a derivative one," Rizio-Hamilton said. When plaintiffs such as the investors assert an individual right, that claim is direct when it is brought outside the fiduciary duty context, he said, citing both the 2015 decision in NAF Holdings LLC v. Li & Fung Trading Ltd. and the 2016 decision in Citigroup Inc. v. AHW Investment Partnership by the Delaware Supreme Court. U.S. Circuit Judge Dana Douglas pointed out that opposing counsel claimed the investors did not bring that argument before the lower court. The Delaware Supreme Court created a two-prong test for direct versus derivative claims, in a case called Tooley v. Donaldson Lufkin & Jenrette Inc. It is true that the investors did not say that Tooley does not apply under Citigroup and NAF, but both of those latter cases are subsequent precedents by the Delaware Supreme Court interpreting and limiting Tooley, Rizio-Hamilton said. The Fifth Circuit's precedent allows for a party to present subsequent authority on the issue of categorizing a claim as derivative or direct to the appellate court, he said. McDermott's attorney, Anthony Lucisano of Baker Botts LLP, told the court that the damage arising from a misleading proxy statement to a shareholder flows from the damage done to a corporation. Because the harm stems from damage to the corporation, the claims must be derivative, he said. U.S. Circuit Judges Edith Brown Clement, Dana M. Douglas and Irma Carrillo Ramirez sat on the panel for the Fifth Circuit. The investors are represented by John Rizio-Hamilton, Katherine M. Sinderson, Aasiya F. M. Glover and Jonathan G. D'Errico of Bernstein Litowitz Berger & Grossmann LLP and Chet B. Waldman and Matthew Insley-Pruitt of Wolf Popper LLP. McDermott is represented Angela C. Zambrano, Mason Parham and Phillip Shaverdian of Sidley Austin LLP and David D. Sterling, Amy Pharr Hefley, J. Mark Little, Anthony J. Lucisano and Frank Mace of Baker Botts LLP. The case is Local 813 Insurance Trust Fund et al. v. McDermott International et al., case number 25-20147, in the U.S. Court of Appeals for the Fifth Circuit.

Mar 2

3 min